Blockbuster Presentation


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Blockbuster Presentation

  1. 1. Blockbuster Past and Future Strategies of a Video Rental Giant
  2. 2. Historical Background <ul><li>Original owner David Cook opened first store in October 1985 in Dallas, Texas </li></ul><ul><li>Cook sought out investors in mid 1980’s to expand business </li></ul><ul><li>Company went public in 1987 </li></ul><ul><li>Chicago businessman Wayne Huizenga owned 60% of the company’s shares </li></ul>
  3. 3. Historical Background <ul><li>Blockbuster expanded by acquiring other local video rental chains </li></ul><ul><ul><li>February 1987 bought Video to Go </li></ul></ul><ul><ul><li>Purchased Erol’s Video Club in 1991 </li></ul></ul><ul><ul><li>Purchased British Company Ritz Video of mid-1990’s </li></ul></ul>
  4. 4. Historical Background <ul><li>Huizenga sold Blockbuster to Viacom in 1994 for $8.4 billion </li></ul>
  5. 5. Competitive Environment <ul><li>Chief competitors in current market </li></ul><ul><ul><li>Movie Gallery </li></ul></ul><ul><ul><li>Hastings Entertainment </li></ul></ul><ul><ul><li>Netflix </li></ul></ul>
  6. 6. Competitive Environment <ul><li>Blockbuster has launched programs such as Blockbuster Total Access to compete with Netflix </li></ul><ul><li>Competition in the market has become very fierce because of the variety of video formats available to consumers for home viewing </li></ul>
  7. 7. Competitive Environment <ul><li>The traditional video store now makes up a much smaller percentage of total video rental market share </li></ul><ul><li>Competitors like Netflix offer rental by mail subscriptions and online video downloads </li></ul><ul><li>Blockbuster also competes with cable and satellite companies’ pay-per-view offerings </li></ul>
  8. 8. Marketing Strategies and Tactics <ul><li>Blockbuster attempting to respond to changes in video rental industry by adding services </li></ul><ul><li>Relying on its well known brand name to generate revenue </li></ul><ul><li>Attempting to set itself apart from rest of industry </li></ul>
  9. 9. Marketing Strategies and Tactics <ul><li>1998 Blockbuster sponsored the American Film Institutes 100 Years of Film museum tour </li></ul><ul><li>Blockbuster has attempted to use its rental store locations as venues for movie promotion </li></ul><ul><li>2002 “Rent it, like it, buy it” promotion </li></ul>
  10. 10. Marketing Strategies and Tactics <ul><li>2004 “Flip Card” promotion which enabled card holders unlimited video game rentals for $49.99 </li></ul><ul><li>2005 Blockbuster eliminated late fees. </li></ul>
  11. 11. Marketing Strategies and Tactics <ul><li>2006 began the era of head-to-head competition with Netflix </li></ul><ul><ul><li>Blockbuster began the year by offering an extended rental to customers who brought in the flap of a Netflix DVD rental envelope </li></ul></ul><ul><ul><li>November 2006 Blockbuster launched Blockbuster Total Access, an online subscription based business similar to Netflix </li></ul></ul>
  12. 12. Human Resource Strategies <ul><li>Blockbuster employs 67,300 employees worldwide </li></ul><ul><li>Just over 50% of Blockbuster’s employees are part-time workers </li></ul><ul><li>Tries to create a culture of fun, teamwork and exceptional customer service </li></ul>
  13. 13. Human Resource Strategies <ul><li>Company hires roughly 1,800 seasonal employees annually during the busy holiday season in November and December </li></ul><ul><li>Blockbuster recruits many full-time and management employees from its large pool of part-time labor </li></ul>
  14. 14. Human Resource Strategies <ul><li>Management structure </li></ul>
  15. 15. Circumstances Leading to Change <ul><li>Introduction of Netflix into the video rental market in 1998 </li></ul><ul><li>Customers lost to Netflix </li></ul><ul><li>Revenues lost to Netflix </li></ul>
  16. 16. Course of Action <ul><li>Creation of Blockbuster by mail and Blockbuster Total Access were created to win back customers lost to Netflix </li></ul><ul><li>Netflix signed up 3 million subscribers by 2005 </li></ul><ul><li>Blockbuster offers a pricing schedule similar to Netflix that allows subscribers to pick a rental plan that works best from them </li></ul>
  17. 17. Course of Action <ul><li>Reinvented store business by adding consumables such as popcorn, candy and soda to the checkout lanes </li></ul><ul><li>Blockbuster eliminated a large source of profitable revenue – late fees – to stay competitive with Netflix and others. </li></ul>
  18. 18. Course of Action <ul><li>Online video rental business projected to grow by 43% in 2007 </li></ul><ul><li>Blockbuster is devoting more resources toward the online rental business </li></ul>
  19. 19. Future Global Marketing Consequences <ul><li>Blockbuster playing catch-up with the following Netflix marketing innovations </li></ul><ul><ul><li>Movies by mail </li></ul></ul><ul><ul><li>Movies and TV episodes viewable on a PC </li></ul></ul><ul><ul><li>Faster turn around of rentals </li></ul></ul><ul><ul><li>Larger online rental catalog </li></ul></ul>
  20. 20. Future Global Marketing Consequences <ul><li>Blockbuster must become more savvy with internet commerce if it is to stay competitive with Netflix </li></ul><ul><li>Blockbuster has earned a bad reputation among Netflix loyalists on the web who tend to be very internet savvy consumers </li></ul><ul><li>Blockbuster attempting to learn from Netflix early mistakes </li></ul>
  21. 21. Future Global Marketing Consequences <ul><li>Blockbuster must create marketing innovations that appeal to the younger generation of technology-savvy consumers </li></ul><ul><li>This is the only way the company will be able to emerge from Netflix’s shadow and become a major market force again </li></ul>